Insurers Allege $3M Fraud In Minn.

By Mark E. Ruquet

NU Online News Service, Aug. 21, 4:10 p.m. EST?Five insurance companies have teamed up to sue five chiropractic clinics and their owners and doctors, alleging $3 million in damages in a Twin City fraud suit.

Progessive Corporation of Mayfield Village, Ohio; Allstate Corp. of Northbrook, Ill., and it's subsidiary Encompass Insurance; Mutual Service Insurance Companies of St. Paul, Minn.; and Western National Mutual Insurance Group, headquartered in Edina, Minn., joined forces in filing a civil lawsuit. The suit alleges that a group of St. Paul and Minneapolis area clinic owners and chiropractors arranged for accident victims to visit their establishments to defraud the insurers.

The suit, filed in Hennepin County District Court, alleges that over a two-year period, insurance investigators found that the clinics obtained motor vehicle accident reports and solicited victims in phone calls to come to the clinic for treatment. Accomplices allegedly were paid for each victim they transported to and from the clinic for treatments.

The five insurers allege the clinics billed for treatments never provided or that were provided by a non-licensed person and billed as chiropractic services.

The five companies are seeking $3 million in damages from Saint Paul Spinal Health Center Inc.; Midwest Family Chiropractic Group, P.A.; South Metro Spinal Rehabilitation Inc.; Eastside Chiropractic and Rehabilitation Inc.; and Northeast Spinal Rehabilitation Inc.

The suit also named the clinic owners Howard Pindyck and chiropractor Phillip Bruno, and chiropractors Michael Czichray, Leonard Evangelist, Mark Soli and Russell Anderson as being part of the scheme.

Courtney Neville, a spokeswoman for Progressive, said a breakdown of individual damages alleged by each insurer was not available. She said the investigation was lead by Progressive.

Pat McCann Progressive's Minnesota special investigative unit manager said Progressive and MSI first learned of the fraud and alerted the other insurers after it was discovered. The collaborative effort resulted in the suit, which he said is the first large collaborative effort brought in the state.

"We compete for the consumer's business, but it's a big help collaborating in these fraud cases," said Mr. McCann adding the insurers regularly share information in this combat and are permitted by the state to do so.

A separate, federal criminal investigation is ongoing, he said, but he could give no further details.

No state criminal charges are pending in the case, said Minnesota Commerce Department spokesman Bruce Gordon, because the department still does not have an investigative arm to root out fraud, despite passage of legislation that allows for the setting up of such a unit in April. He said the department is still waiting for the state legislature to provide funding for an investigative unit so it can pursue these cases.

Jim Bernstein, Minnesota Commerce Commissioner, said in a statement that when the legislature does finally provide the funds for the unit, it "will have a real impact on cracking down on this illegal activity."

Mr. Gordon disputed the insurers' statement that the state's current no-fault law requiring insurers to either deny or pay claims within 30 days is contributing to fraud. He said insurers can hold up payment when the company has evidence of fraud.

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Insurers Allege $3M Fraud In Minn.

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